Millward Brown's POV, June 2008

Marketing Effectiveness: Beyond the Short Term

While the results of marketing investments are most readily measured in the short term, marketing’s beneficial effects often extend well beyond the initial weeks or months following a particular campaign or activity. Therefore, marketers who have a clear idea of how their activities will work in both the short and the long term are able to balance their immediate and longterm objectives in their brand management decisions.

As I discussed in my previous POV, Marketing Effectiveness: It’s More Than Just ROI, there is more to marketing effectiveness than what can be readily expressed in terms of return on investment. There is also more to marketing effectiveness than what can be observed and measured in the short term. But while marketers recognize the value that can be realized over the long term, they are often uncertain as to how to achieve it. Compared to short-term outcomes, long-term effects are harder to plan for, in part because they are harder to define and measure precisely.

The need to demonstrate marketing effectiveness in the short term is a given. While this need is felt most acutely by marketers at publicly owned companies that must report quarterly earnings, marketers at privately held companies are also subject to pressure for proof of return on investment. And it is not surprising that businesspeople look for a quick payback. Investments are made on a continuing basis, and in deciding how much to invest for the next period, it’s helpful to know how recent activities have performed. For example, did a recent campaign lift sales sufficiently to generate incremental profit over and beyond the cost of the campaign?

Most marketers, however, also recognize that there is more to marketing than incremental short-term payback. They know that today’s marketing investments will yield something beyond today’s immediate response. They know that their brands’ current market positions have been built over years, perhaps even decades, and that in their brands’ performance today they are observing the legacy of previous marketing investments — for example, in today’s loyal buyers, who were once new customers. The Millward Brown Optimor BrandZ™ Top 100 Most Powerful Brands Ranking testifies to the value that is attributed to brands by the financial markets. Figure 1 shows the performance over time of the companies owning the brands in the BrandZ Top 100 versus the S&P 500.